Amazon Considers Crowdsourcing Delivery Services
By Christine Kern, contributing writer
Amazon On My Way Delivery service could utilize crowdsourcing for efficient, cost-effective service
Amazon is apparently learning from Uber’s crowdsourcing success and is developing an app to crowdsource deliveries, according to the Wall Street Journal.
The service, internally dubbed “On My Way,” would tap ordinary people to pick up and drop off packages for Amazon as they go about their other errands.
The move is an effort to counter rising shipping costs, which have increased more than 30 percent in the last year. Amazon has been instrumental in driving same-day and one-hour deliveries.
If successful, the “On My Way” initiative would be a cheaper alternative to drones, USPS, FedEx, UPS, or even bike messengers that currently provide delivery services for Amazon, as Fortune pointed out.
“Last year, Amazon’s shipping costs jumped by $2.07 billion to $8.7 billion, or 9.8 percent of sales, compared with 8.9 percent the year prior,” the Wall Street Journal reported.
Amazon had over $1 billion in net shipping losses in each of the last two quarters, Colin Gillis, a senior technology analyst with BGC Financial, told USA Today, "so this is an issue for them."
"You see all these Ubers driving around, people going from point A to point B and you say to yourself, 'Couldn't I stick a package in their trunk?' So it makes sense for Amazon to be looking at this," Gillis said.
Amazon tried a limited network in San Francisco, where Amazon-supervised contractors deliver packages around the area, but that experiment was not expanded, the Wall Street Journal noted.
Under the new proposed initiative, Amazon would also sign agreements with local retailers in urban areas to store packages, either renting space or paying a per-package fee, according to inside sources at Amazon, CNBC reported.
The two major challenges to the initiative will be customer service and public acceptance. How the company protects against theft or damage will be crucial to the program’s ultimate success.
Brendan Witcher, an analyst with Forrester Research told USA Today that there is also an issue of privacy, and whether or not people are going to be “comfortable having their products delivered by their neighbors.”
But the service does open up a new pool of potential drivers, Witcher said. "There's a large community of individuals who don't feel comfortable with having people in their car, but they'd be completely comfortable having a package in their trunk.”
There is currently no timeline for the initiative, and actually, no guarantee that it will launch at all. But since Amazon has experimented time and again with new and faster (and cheaper) ways to deliver products to its customers – including planned delivery by drones - it is highly likely that they will launch the Uber-esque service if it is feasible.